This website will be unavailable from Thursday, May 30, 2024 at 6:00 p.m. through Monday, June 3, 2024 at 7:00 a.m. due to data center maintenance.
79R13045 MXM-D
By: Haggerty H.B. No. 1132
Substitute the following for H.B. No. 1132:
By: Thompson C.S.H.B. No. 1132
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of and rights of private security
personnel; providing a penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. INSURANCE CODE CHANGES
SECTION 1.01. Subchapter E, Chapter 21, Insurance Code, is
amended by adding Article 21.49-21 to read as follows:
Art. 21.49-21. JOINT UNDERWRITING ASSOCIATION FOR SECURITY
SERVICES CONTRACTORS
Sec. 1. DEFINITIONS. In this article:
(1) "Association" means the joint underwriting
association established under this article.
(2) "Board of directors" means the board of directors
of the association.
(3) "Critical infrastructure" and "homeland security
activity" have the meanings assigned by Section 421.001, Government
Code.
(4) "Security services contractor" means a person who
holds a license as a securities services contractor in accordance
with Section 1702.102, Occupations Code.
Sec. 2. IMMUNITY. Liability does not exist on the part of,
and a cause of action does not arise against, the association, an
association agent or employee, an insurer, an agent licensed under
this code, the commissioner or department, or an authorized
representative of the commissioner or department for a statement
made in good faith by any of them:
(1) in a report or communication concerning risks
insured or to be insured through the association; or
(2) at an administrative hearing conducted in
connection with the report or communication.
Sec. 3. APPLICABILITY OF OTHER LAW. The association is
subject to Chapters 251 and 253 and Articles 1.15 and 1.16 of this
code.
Sec. 4. RELATIONSHIP TO SURPLUS LINES INSURANCE. The
association is not an authorized insurer for purposes of Chapter
981 of this code with respect to general liability insurance for
security services contractors.
Sec. 5. PURPOSE OF ASSOCIATION. The association provides
general liability insurance on a self-supporting basis.
Sec. 6. BOARD OF DIRECTORS. (a) The association is
governed by a board of directors composed of the following nine
members:
(1) five representatives of insurers that are required
to be association members, elected by association members in
accordance with the plan of operation;
(2) two representatives of security services
contractors, appointed by the commissioner; and
(3) two public members, appointed by the commissioner.
(b) The board members serve one-year terms beginning on
October 1 of each year.
Sec. 7. PLAN OF OPERATION. (a) The association operates
under a plan of operation adopted by the commissioner.
(b) The plan of operation must:
(1) provide for economic, fair, and nondiscriminatory
administration;
(2) provide for the prompt and efficient provision of
general liability insurance; and
(3) contain other provisions, including provisions
relating to:
(A) the establishment of necessary facilities;
(B) the association's management;
(C) the assessment of members and policyholders
to defray losses and expenses;
(D) the administration of the policyholder's
stabilization reserve fund;
(E) commission arrangements;
(F) reasonable and objective underwriting
standards;
(G) the acceptance, assumption, and cession of
reinsurance;
(H) the appointment of servicing insurers; and
(I) procedures for determining amounts of
insurance to be provided by the association.
(c) The plan of operation must direct that any revenue
exceeding expenditures that remains in the association's funds at
the close of the association's fiscal year, after the association
reimburses members' contributions in accordance with Section 26(a)
of this article, be added to the association's reserves.
Sec. 8. AMENDMENTS TO PLAN OF OPERATION. Amendments to the
plan of operation:
(1) shall be made at the commissioner's direction; or
(2) may be made by the board of directors, subject to
the commissioner's approval.
Sec. 9. JOINT UNDERWRITING ASSOCIATION MEMBERSHIP. (a)
The association is composed of each insurer, including a Lloyd's
plan and a reciprocal or interinsurance exchange, authorized to
write and writing liability insurance, including automobile
liability insurance, on a direct basis in this state, other than:
(1) a farm mutual insurance company authorized under
Chapter 911 of this code; and
(2) a county mutual insurance company authorized under
Chapter 912 of this code.
(b) An insurer that is a member of the association must
remain a member as a condition of the insurer's authority to engage
in the business of the insurance described by Subsection (a) of this
section.
(c) Each association member participates in the writings,
expenses, and losses of the association in the proportion that the
net direct premiums of the member, excluding the portion of
premiums attributable to the operation of the association, written
during the preceding calendar year bear to the aggregate net direct
premiums written in this state by all association members.
(d) The association shall annually determine a member's
participation in the association on the basis of the net direct
premiums written by the member during the preceding calendar year,
as reported in the annual statements and other reports the member
files as required by the department.
Sec. 10. ANNUAL STATEMENT; ADDITIONAL INFORMATION. (a)
Not later than March 1 of each year, the association shall file with
the department a statement that contains information regarding the
association's transactions, condition, operations, and affairs
during the preceding calendar year.
(b) The statement must:
(1) contain the matters and information required by
the department; and
(2) be in the form approved by the department.
(c) The department at any time may require the association
to provide additional information regarding the association's
transactions or condition, or any related matter considered to be:
(1) material; and
(2) of assistance in evaluating the scope, operation,
and experience of the association.
Sec. 11. GENERAL ELIGIBILITY FOR COVERAGE. (a) The
commissioner shall by order establish the categories of security
services contractors that are eligible to obtain general liability
insurance coverage from the association based on the types of
services the contractors provide. The commissioner shall ensure
coverage is available for security services contractors that
provide services that support critical infrastructure and homeland
security activities in this state.
(b) If a category of security services contractor is
excluded from eligibility to obtain insurance coverage from the
association, the commissioner may determine, after notice of at
least 10 days and a hearing, that general liability insurance is not
otherwise available. On that determination, the previously
excluded category is eligible to obtain insurance coverage from the
association.
Sec. 12. INSURER OF LAST RESORT. (a) A security services
contractor not otherwise eligible for insurance coverage from the
association under Section 11 of this article is eligible for that
coverage if the contractor demonstrates, in accordance with the
requirements of the association, that the contractor:
(1) made a verifiable effort to obtain insurance
coverage from authorized insurers and eligible surplus lines
insurers; and
(2) was unable to obtain substantially equivalent
insurance coverage and rates.
(b) The commissioner by rule may adopt loss control or best
practices requirements applicable to a security services
contractor who obtains general liability insurance coverage from
the association under this section.
Sec. 13. APPLICATION FOR COVERAGE. (a) A security services
contractor included in a category eligible for general liability
insurance coverage by the association is entitled to apply to the
association for the coverage. An agent authorized under Chapter
4051 of this code may apply on behalf of an applicant.
(b) The association shall issue a general liability
insurance policy to an applicant:
(1) if the association determines that:
(A) the applicant meets the underwriting
standards of the association prescribed by the plan of operation;
and
(B) there is no unpaid and uncontested premium,
policyholder's stabilization reserve fund charge, or assessment
due from the applicant for prior insurance, as shown by the
insured's failure to pay or to object in writing to the charges on
or before the 30th day after the date of the billing; and
(2) on receipt of the premium and the policyholder's
stabilization reserve fund charge, or the portion of the premium
and charge prescribed by the plan of operation.
Sec. 14. POWERS RELATING TO GENERAL LIABILITY INSURANCE
COVERAGE. Under this article and the plan of operation, the
association, on behalf of the association members, may:
(1) issue, or cause to be issued, general liability
insurance policies to applicants, including primary, excess, and
incidental coverages, subject to the limits specified in the plan
of operation and Section 15 of this article;
(2) underwrite general liability insurance and adjust
and pay losses related to that insurance, or appoint servicing
insurers to perform those functions;
(3) either or both accept and refuse the assumption of
reinsurance from association members; and
(4) cede and purchase reinsurance.
Sec. 15. GENERAL LIABILITY INSURANCE COVERAGE PROVIDED.
The association shall provide general liability insurance coverage
in a form and in at least the amounts sufficient to satisfy the
requirements of Section 1702.124, Occupations Code. The insurance
coverage provided may, in accordance with the plan of operation,
include additional related liability coverages necessary or
advisable for the operations of a security services contractor.
Sec. 16. FOLLOWING FORM EXCESS LIABILITY COVERAGE. Excess
liability insurance coverage written for a security services
contractor by the association must be written as following form
excess liability insurance to the contractor's primary insurance
coverage.
Sec. 17. PUNITIVE DAMAGES EXCLUDED. The association may
not issue or renew a general liability insurance policy for a
security services contractor that includes coverage for punitive
damages assessed against the contractor.
Sec. 18. INSTALLMENT PLAN. The association may offer an
installment payment plan for general liability insurance coverage
obtained through the association.
Sec. 19. TERM OF POLICY; NOTICE OF TERMINATION OF COVERAGE.
A general liability insurance policy issued by the association must
be for a term of one year or less, as determined by the association.
To terminate coverage under the policy, the association must comply
with the requirements of Section 1702.124(e), Occupations Code.
Sec. 20. APPLICABILITY OF OTHER LAW TO RATES AND POLICY
FORMS. (a) Except as provided by Subsection (b) of this section
and Section 21 of this article, the rates, rating plans, rating
rules, rating classifications, territories, and policy forms
applicable to the general liability insurance written by the
association and related statistics are governed by Subchapter B,
Chapter 5, of this code, and the other provisions of this code, to
the same extent as other general liability insurance written in
this state.
(b) If a provision of a law described by Subsection (a) of
this section conflicts with a provision of this article, this
article prevails.
Sec. 21. RATE STANDARDS. (a) In determining rates, rating
plans, rating rules, rating classifications, territories, and
policy forms, the association shall consider:
(1) the past and prospective loss and expense
experience for general liability insurance, inside and outside this
state, of all of the association members;
(2) trends in the frequency and severity of losses;
(3) the association's investment income; and
(4) other information the commissioner may require.
(b) Rates, rating plans, and rating rules must be based on:
(1) the association's loss and expense experience; and
(2) other information based on that experience the
department considers appropriate.
(c) The resultant premium rates must be:
(1) actuarially sound; and
(2) computed to be self-supporting.
Sec. 22. DEFICIT RECOUPMENT. (a) This section applies to a
deficit sustained in a single year by the association.
(b) The deficit must be recouped in accordance with the plan
of operation and the rating plan in effect when the deficit is
sustained under one or more of the following procedures, in this
sequence:
(1) a contribution from the policyholder's
stabilization reserve fund established under this article, until
the respective fund is exhausted;
(2) an assessment on the policyholders in accordance
with Section 23 of this article; or
(3) an assessment on the members in accordance with
Sections 9(c) and (d) and 24 of this article.
Sec. 23. ASSESSMENT OF POLICYHOLDERS FOR DEFICIT
RECOUPMENT. (a) Each policyholder has contingent liability for a
proportionate share of an assessment of policyholders made under
this article.
(b) If a deficit, as computed under the plan of operation,
is sustained in a single year, the board of directors shall levy an
assessment only on the policyholders who held policies in force at
any time during the two most recently completed calendar years:
(1) before the date the assessment is levied; and
(2) in which the association was issuing policies.
(c) The aggregate amount of an assessment under Subsection
(b) of this section must be equal to the amount of the deficit not
recouped under Section 22(b)(1) of this article from the
policyholder's stabilization reserve fund. Subject to Subsection
(d) of this section, each policyholder shall be assessed for a
portion of the deficit that reflects the proportion that the earned
premium on the policies of that policyholder bears to the total
earned premium for all policies of the association in the two most
recently completed calendar years.
(d) The maximum aggregate assessment on each policyholder
may not exceed the annual premium for the general liability
insurance policy most recently in effect.
Sec. 24. LIMITATION ON REIMBURSEMENT BY MEMBER FOR DEFICIT
RECOUPMENT. (a) An association member is not obligated in a single
year to reimburse the association for the member's proportionate
share of the deficits from the association's operations in that
year in an amount that exceeds one percent of the member's
policyholder surplus. The aggregate amount not reimbursed in
accordance with this subsection shall be reallocated among the
other association members. The association shall reallocate that
amount in accordance with the method of determining a member's
participation under Sections 9(c) and (d) of this article, after
excluding the total net direct premiums of all members not sharing
in the excess deficits.
(b) If the deficits from the association's operations
allocated to all association members in a calendar year exceed one
percent of all members' respective policyholder surplus, the
association shall allocate to each member the amount of the
deficits in accordance with the method of determining a member's
participation under Sections 9(c) and (d) of this article.
Sec. 25. CONTRIBUTION BY MEMBERS FOR SOUND FINANCIAL
OPERATION. If sufficient funds are not available for the sound
financial operation of the association, each association member
shall contribute to the financial requirements of the association
in accordance with Sections 9(c) and (d), 23, and 24 of this
article, as authorized and considered necessary by the department.
A contribution under this subsection is in addition to:
(1) an assessment paid in accordance with the plan of
operation under this article; and
(2) a contribution from a policyholder's stabilization
reserve fund.
Sec. 26. REIMBURSEMENT OF ASSESSMENT OR CONTRIBUTION;
PREMIUM TAX CREDIT. (a) Subject to commissioner approval, the
association shall reimburse an assessment or contribution, with
interest at a rate approved by the commissioner, to:
(1) the association members; or
(2) the state, to the extent that the members have
recouped their assessments using premium tax credits as provided by
Subsection (c) of this section.
(b) Pending recoupment or reimbursement of an assessment or
contribution paid by a member to the association, the unrepaid
balance of the assessment or contribution may be reflected in the
member's books and records as an admitted asset of the member for
all purposes, including exhibition in an annual statement under
Section 862.001 of this code.
(c) To the extent a member has paid one or more assessments
and has not received reimbursement from the association in
accordance with Subsection (a) of this section, a credit against
premium taxes under Chapter 221 of this code is allowed at a rate of
20 percent a year for five successive years following the year in
which the deficit was sustained. At the member's option, the tax
credit may be taken over an additional number of years.
Sec. 27. STANDARDS FOR RECOUPMENT PROVISIONS. A provision
for recoupment must be based on:
(1) the association's loss and expense experience; and
(2) other information based on that experience the
department considers appropriate.
Sec. 28. POLICYHOLDER'S STABILIZATION RESERVE FUND. (a)
The policyholder's stabilization reserve fund is collected and
administered by the association as provided by this section,
Section 29 of this article, and the plan of operation.
(b) The policyholder's stabilization reserve fund shall be:
(1) credited with all policyholder's stabilization
reserve fund charges collected under Section 29 of this article;
(2) charged with any deficit sustained from the
association's operation during the previous year;
(3) treated as a liability of the association along
with, and in the same manner as, premium and loss reserves; and
(4) valued annually by the board of directors as of the
close of the preceding year.
Sec. 29. POLICYHOLDER'S STABILIZATION RESERVE FUND CHARGE.
(a) Each policyholder shall pay annually into the policyholder's
stabilization reserve fund under Section 28 of this article a
charge that:
(1) is in an amount established annually by advisory
directors chosen by security services contractors eligible for
insurance through the association in accordance with the plan of
operation;
(2) is in proportion to each premium payment due for
general liability insurance through the association; and
(3) is separately stated in the policy.
(b) A charge stated in a policy as required by Subsection
(a)(3) of this section is not:
(1) a part of premiums; or
(2) subject to premium taxation or a servicing fee,
acquisition cost, or any other similar charge.
(c) If the association offers an installment payment plan
for coverage obtained through the association, the association may:
(1) permit payment of the policyholder's stabilization
reserve fund charge under this section on an installment basis; or
(2) require the policyholder to pay the charge as an
annual lump sum.
(d) Collections of the policyholder's stabilization reserve
fund charge under this section shall continue until the net balance
of the policyholder's stabilization reserve fund under Section 28
of this article is not less than the projected sum of premiums to be
written in the year following the valuation date.
Sec. 30. APPEAL TO BOARD OF DIRECTORS; HEARING. (a) A
person insured or applying for insurance under this article, the
person's authorized representative, or an affected insurer that may
be aggrieved by an act, ruling, or decision of the association may
appeal to the board of directors not later than the 30th day after
the date the act occurs. At the time the person is notified of the
act, ruling, or decision, the association shall provide to the
person written notice of the person's right to appeal under this
subsection.
(b) The board of directors shall:
(1) hear an appeal brought under Subsection (a) of
this section not later than the 30th day after the date the board of
directors receives the appeal; and
(2) give not less than 10 days' written notice of the
time and place of the hearing to the person bringing the appeal or
the person's authorized representative.
Sec. 31. DECISION OF BOARD OF DIRECTORS. (a) Not later
than the 10th day after the date of the hearing under Section 30(b)
of this article, the board of directors shall affirm, reverse, or
modify the board's previous action or the appealed act, ruling, or
decision.
(b) At the time the person is notified of the final action of
the board of directors, the association shall provide to the person
written notice of the person's right to appeal under Section 32 of
this article.
Sec. 32. APPEAL TO COMMISSIONER; HEARING. (a) Not later
than the 30th day after the date of the final action of the board of
directors under Section 31 of this article, a person insured or
applying for insurance aggrieved by that final action may appeal to
the commissioner by making a written request for a hearing.
(b) The appeal shall be heard not later than the 30th day
after the date the appeal is received. The person bringing the
appeal or the person's authorized representative must be given
written notice of the time and place of the hearing on or before the
10th day before the date of the hearing.
Sec. 33. COMMISSIONER'S DECISION. (a) Not later than the
30th day after the date of the hearing under Section 32, the
commissioner shall affirm, reverse, or modify the appealed act,
ruling, or decision.
(b) Pending the hearing and decision, the commissioner may
suspend or postpone the effective date of a rule or of the act,
ruling, or decision appealed.
Sec. 34. APPEAL OF COMMISSIONER'S DECISION. (a) The
association or a person aggrieved by an order or decision of the
commissioner may appeal in accordance with Subchapter D, Chapter
36, of this code.
(b) At the time the person is notified of the commissioner's
order or decision, the commissioner shall provide to the person
written notice of the person's right to appeal under this section.
SECTION 1.02. (a) Not later than October 1, 2005, the
commissioner of insurance shall appoint an initial board of
directors for the joint underwriting association established by
Article 21.49-21, Insurance Code, as added by this article,
including five representatives of insurers that will be required to
be association members. The initial board of directors appointed
under this section serves until September 30, 2006.
(b) Not later than January 1, 2006, the commissioner of
insurance shall adopt a plan of operation for the joint
underwriting association established by Article 21.49-21,
Insurance Code, as added by this article. Before adopting the plan
of operation, the commissioner shall consult with the initial board
of directors of the association, representatives of the public, and
representatives of the security services industry. The plan of
operation must include provisions that authorize a preliminary
assessment of the members of the association for initial operating
expenses of the association.
ARTICLE 2. OCCUPATIONS CODE CHANGES
SECTION 2.01. Section 1702.163(a), Occupations Code, is
amended to read as follows:
(a) The board [commission] may not issue a security officer
commission to an applicant employed by a license holder unless the
applicant submits evidence satisfactory to the board [commission]
that the applicant has:
(1) completed the basic training course at a school or
under an instructor approved by the board [commission];
(2) met each qualification established by this chapter
and board [commission] rule;
(3) achieved the score required by the board
[commission] on the examination under Section 1702.1685; and
(4) demonstrated to the satisfaction of the firearm
training instructor that the applicant has complied with other
board [commission] standards for minimum marksmanship competency
with a handgun [shotgun].
SECTION 2.02. Section 1702.282, Occupations Code, is
amended by amending Subsection (a) and adding Subsection (d) to
read as follows:
(a) The board [commission] shall conduct a criminal history
check, including a check of any criminal history record information
maintained by the Federal Bureau of Investigation, in the manner
provided by Subchapter F, Chapter 411, Government Code, on each
applicant for a license, registration, security officer
commission, letter of approval, permit, or certification. An
applicant is not eligible for a license, registration, commission,
letter of approval, permit, or certification if the check reveals
that the applicant has committed an act that constitutes grounds
for the denial of the license, registration, commission, letter of
approval, permit, or certification. Except as provided by
Subsection (d), each [Each] applicant shall include in the
application two complete sets of fingerprints on forms prescribed
by the board [commission] accompanied by the fee set by the board
[commission].
(d) An applicant who is a peace officer is not required to
submit fingerprints with the applicant's application. On request,
the law enforcement agency or other entity that employs the peace
officer or the entity that maintains the peace officer's
fingerprints shall provide the fingerprints for the peace officer
to the board. The applicant shall provide sufficient information
to the board to enable the board to obtain the fingerprints under
this subsection.
ARTICLE 3. PENAL CODE CHANGES
SECTION 3.01. Section 46.05, Penal Code, is amended by
amending Subsection (f) and adding Subsection (g) to read as
follows:
(f) It is a defense to prosecution under this section for
the possession of a chemical dispensing device that the actor is
[holds] a security officer [commission issued by the Texas
Commission on Private Security] and has received training on the
use of the chemical dispensing device by a training program that is:
(1) provided by the Commission on Law Enforcement
Officer Standards and Education; or
(2) approved for the purposes described by this
subsection by the Texas [Commission on] Private Security Board of
the Department of Public Safety.
(g) In Subsection (f), "security officer" means a
commissioned security officer as defined by Section 1702.002,
Occupations Code, or a noncommissioned security officer registered
under Section 1702.221, Occupations Code.
ARTICLE 4. EFFECTIVE DATE
SECTION 4.01. This Act takes effect September 1, 2005.